Soybean prices strong, even with foreign pressure

Good weather patterns in Argentine soybean growing areas have created downward pressure for new-crop futures prices. But old-crop beans remain strong thanks to good export sales.

Chris Hurt, Purdue University Extension economist sees good marketing opportunities for remaining 2013 soybeans. And he tells Corn+Soybean Digest farmers should be ready for 2014 crop sales if November futures rally to $11.70 per bushel.

November beans were trading in the $11.30 range on Friday, still hurt by good South American growing conditions. “Soybean prices have been under downward pressure as a result of reduced weather threats to production in Argentina,” Hurt says. “Old-crop prices, however, should be supported by the continued rapid pace of export sales and shipments.”

Hurt says the Jan. 10 USDA crop reports will likely be an important signal in determining the direction of prices. “Those reports are expected to show higher 2013 U.S. production that will be offset by an increase in U.S. exports,” he says. “The magnitude of those offsetting numbers will be the price driver.

“January soybean futures have support at $12.50 per bushel, with strong resistance at $13.50. Producers should consider making additional sales near the highs. Inverted cash bids into the spring and summer will encourage farmers to market aggressively this winter. Those wishing to speculate for higher prices can then do so with futures or call options.”

Hurt notes that South American soybean yields will likely be determined soon. “The critical yield determination period for those crops will be in late-January and February,” he says. “So the winter price direction will be influenced by the weather over the next 8 weeks. That direction can be upward, but would probably involve some shift in South American weather toward more damaging conditions.”

He believes the market will also focus on increased U.S. soybean acres. “Current crop budgets for 2014 strongly favor soybeans over corn with expected shifts of 3 to 4 million more bean acres” Hurt says.

If the South American crop is favorable, increased U.S. acreage will result in growing inventories. “Cash prices at harvest could be in the $10 to $11 range,” warns Hurt. “So this winter, farmers will want to be ready to start their pricing if November futures move upward to $11.70 or higher.”

He encourages farmers to take extra steps to reduce input costs and work to price soybeans at levels that cover expected costs. “Crop insurance is also expected to cover soybean production costs better than corn,” he says. “This is another factor that will encourage more bean acres.”